Medicare managed care plans drop seniors -- again

Medicare+Choice plans blame low pay and burdensome regulations for their withdrawals from the program.

By Susan J. Landers, amednews staff. July 24, 2000.

Washington -- A new spate of health plan decisions to exit Medicare has increased calls for reimbursement and regulatory relief in the managed care community.

At least 711,000 Medicare beneficiaries will be forced to find new managed care plans or return to the traditional fee-for-service program by the end of the year as a result of the pullouts. About 6 million people are enrolled in Medicare managed care.

Medicare dropouts

The number of affected beneficiaries was determined in a survey conducted for the American Assn. of Health Plans, a lobbying group representing plans that cover 5.2 million beneficiaries, or 85% of all those enrolled in Medicare+Choice.

AAHP President and CEO Karen Ignagni said she expected the number of beneficiaries affected to climb even higher when the final tally is readied.

At press time, the Health Care Financing Administration was calculating just how many seniors will be affected by the plans' decisions.

In 1998 and 1999, a total of 732,000 beneficiaries were forced to find new health plans or return to the traditional Medicare program when 99 plans withdrew from the program entirely or from specific markets.

Of the 18 large health plans that participated in AAHP's survey, 14 cited inadequate payments and excessive regulatory burdens as their reasons for withdrawal.

Humana Inc., which has offered Medicare HMO plans for 14 years, faulted the federal government for failing to provide the help that plans need to continue in the program.

"Despite our pleas to Washington asking that the inequities in reimbursement and cumbersome administrative burdens be addressed, the government has refused to fix the problem," said Michael B. McCallister, Humana's president and CEO.

The withdrawals did not have to happen, Ignagni said. "For two years America's health plans have asked Washington to honor the promise made to seniors and individuals with disabilities, and to adequately fund the Medicare+Choice program."

Building on an option that had been available since 1985, Congress developed Medicare+Choice three years ago. The program allows Medicare beneficiaries to opt out of the traditional program and enroll in managed care plans that generally provide a more generous package of benefits, often including outpatient prescription drugs.

But most recently, plans remaining in the program have been cutting back benefits and boosting co-payments and deductibles for prescription drug benefits, thus decreasing the attractiveness of Medicare managed care.

Ignagni remained hopeful that Congress still could issue a reprieve by allocating more funds in these years of growing budget surpluses. "We are encouraged by evidence of growing bipartisan and bicameral support, and by efforts on the part of the administration to begin stabilizing the program," she said.

Although a House-passed Medicare prescription drug bill does include a funding boost for Medicare+Choice, the $2.4 billion over five years offered in the legislation does not come close to the $15 billion over five years that Ignagni says is necessary.

HCFA also announced some regulatory changes intended to ease plans' burdens. The changes allow plans to increase the size of their provider networks, and permit those that leave the program to return in two years instead of five. Whether those changes persuaded some plans to remain in the program is not known.